Best Large Cap Stocks Right Now

Large-cap stocks are stocks issued by corporations that have major influence over the economy. The “cap” in large-cap refers to the company’s “market capitalization,” which is equal to the company’s current share price multiplied by its outstanding number of shares. As the name suggests, these stocks have very high market capitalizations — most of them have capitalizations well above $10 billion.

Though you won’t find many stocks under $5 when you shop for these stocks, they can add a layer of safety and stability to your profile. Our guide to them will help you understand a little more about what sets these companies apart from the rest. This is a good time to introduce you to a few ideas when it comes to large-cap investment opportunities. But, you shouldn’t focus only on large-cap stocks when there are other assets that can support them in your portfolio.

Quick Look at the Best Large Cap Stocks:

• Starbucks
• ExxonMobil
• Taiwan Semiconductor Manufacturing Co.
• McDonald's Corporation
• Nvidia
• Walt Disney
• American Tower
• Eli Lilly
• Samsung Electronics

Overview: Large Cap Stocks

A large-cap stock is a stock with a market capitalization over $10 billion. The best-known companies in the United States all have them — and large-cap stocks make up around 90% of the total U.S. market. Some of the best examples of large cap stocks include:

• Coca-Cola (NYSE: KO)
• Walmart (NYSE: WMT)
• Facebook (NASDAQ: FB)
• Clorox (NYSE: CLX)

Notice a mix of companies that are rather popular and have a massive public image and firms that you may not have thought were all that valuable. Sure, companies need uniforms for their workers, but Cintas is a large cap stock? It is because the company has effectively cornered the market in this sector. Likewise, you may not have heard of Unilever, but they produce a massive range of home and beauty products you likely use. Even more shocking is Clorox. Most people reading this page have a Clorox product in their home, but it’s a large cap stock?

What to Look for in Large Cap Stocks

These stocks often have higher share prices, but they come with a number of benefits. Some of the biggest reasons why investors choose them include:

• Stability: Companies that issue large-cap stocks are usually market leaders with very little price fluctuations. This makes them a safer investment when compared to penny stocks or stocks under $10.
• Transparency: Large-cap stocks typically have very transparent earnings reports and corporate structures. You can almost always find information, analysis and expert opinions on these stocks without doing hours of research, making it very difficult to get involved in a scam or price manipulation.
• Higher average trading volumes: Large-cap stocks have higher average daily trading volumes than mid-cap and small-cap stocks. This means that if you need to sell your investments, you’re much more likely to be able to unload your shares quickly.
• Name recognition: Name recognition is a big part of investing. Investors tend to understand big name companies better, giving them a peace of mind they can’t get elsewhere.
• Room to fluctuate: Large cap stocks have a bit of room to fluctuate. While you don’t want to allow an investment to bottom out completely, a loss of even $50 per share is not all that much when you’re considering large cap stocks—a figure that can be made up rather easily. Monitor your assets closely, but remember that you don’t need to panic at the first sign of trouble.
• A fit with your trading strategy: Your trading strategy must match the large cap stocks you want to purchase. If they don’t fit in with your needs, you should move on.

Many large-cap stocks are also considered to be blue-chip stocks as well. A blue-chip stock is the stock of a company that has a long history of profitability, very little debt and an overall very consistent business in place. Blue chip stocks usually have high levels of diversification as well — if they have a rough quarter or year, their stock is less likely to see a drop in price.

Some investors are attracted to these stocks because the companies that issue them often have the stability and profit to offer consistent dividends. A dividend is a portion of a company’s profit that is paid out to shareholders. A company might issue dividends on an annual, monthly or quarterly basis, and the amount of money shareholders receive during each payment is directly dependent upon the number of shares of stock they hold. 

For example, if Company A is offering a dividend of $1 and you own 1,000 shares of the stock, you’ll receive $1,000 on the payment date. Though few companies are required to pay dividends, many large-cap stocks elect to. This is something that these companies do to benefit you, but they also engender a bit of goodwill that speaks to investors. Yes, you might be loyal to a blue chip stock because it pays dividends, but you must also research these stocks and make sure that they are still the most appropriate assets for your portfolio going forward.

If you find that certain assets are not performing well for you, you can reinvest that cash in other types of investments. Yes, you could pour your money back into large cap stocks, or you may want to look into ETFs, penny stocks, etc.

Best Online Brokers for Large Cap Stock

No matter if you’re purchasing thousands of dollars’ worth of large-cap stock or you’re browsing stocks under $20 to swing trade, you’ll need to place your buy or sell orders through a broker. A broker is a person or company that’s licensed to purchase or sell stocks and other securities on behalf of another person. Though most people think of the frantic brokers of Wall Street when they imagine a stockbroker, most brokerage firms now allow you to do all of your buying and selling online through a single platform.

Don’t already have a brokerage account? Consider a few of our favorites listed below. 

Unique Features of Large Cap Stocks

Large cap stocks are usually more expensive than mid- or small-cap stocks. Get the most out of your money by searching for these 3 features before you invest.

• A high earnings per share value: A company’s earnings per share (EPS) value is equal to its current profit divided by the number of shares of stock outstanding. When you invest, be sure to select a stock with a solid, positive EPS — this indicates that the company is consistently profitable and isn’t paying out more money than it’s bringing in.  
• Consistently met targets: Each quarter, analysts set a “consensus EPS” for every large-cap company. A consensus EPS is an expert estimation of what a company should announce as its EPS before its quarterly earnings report is released. When you shop for large cap stocks, look for companies that consistently meet or beat the consensus — this indicates that there are less likely to be hidden financial issues within the company.
• A solid dividend yield: Instead of looking for large cap stocks that pay the highest dividends, search for ones with a solid dividend yield. A dividend yield is equal to a company’s annual dividend payout divided by its current share price. Dividend yields above 10% are usually considered to be riskier investments. 
• Name recognition: Name recognition isn’t going to make you money, but it can help. Remember, there are some companies that are almost too big to fail, and their name recognition makes it easier for them to remain relevant and maintain their stock value. Balance name recognition with the items mentioned above to make wise investment decisions.
• Easy to understand business model: Don’t invest in something you cannot understand. If the business model isn’t easy to understand, you may not be in possession of an asset that can perform over the long-term.

Considerations With Large Cap Stocks

Large cap stocks, like any asset, are not perfect. As a result, you need to take a look at things that could go wrong with large cap stocks. You cannot invest with fear, but you should invest with a bit of wisdom, understanding that things can change.

• Stagnant growth: No stock cano grow forever, but you may find that some large cap stocks retain their massive market cap without continuing to grow into the future.
• Mergers & acqusitions: While you will be paid for stocks you hold during a buyout or compensated during a merger, you may not be investing in the same stock anymore. As a result, you need to decide where to allocate those funds now that the original stock no longer exists.
• Loss of market interest: It’s possible that a once proud and majestic large cap stock might fall by the wayside. For example, Enron was once a bastion of growth an opportunity, until the market ran for the hills when the company crumbled. Moreover, some businesses simply don’t last forever. Look at the status of Macy’s in the malls of the 80s and 90s versus where the company sits today.

Leveraging Your Portfolio With Large Cap Stocks

Many investors put their money into these stocks because they want to purchase securities that will safely hold their investment capital. While large-cap stocks are generally much more stable and see fewer price fluctuations than stocks from companies with smaller market capitalizations, they aren’t the only way to invest in the long term. 

In addition to these stocks, consider investing in a few total market or S&P 500 funds. These securities offer a higher level of diversification than buying individual large-cap stocks, which can better protect your investment.  

With companies like Apple and Amazon hitting the mythical trillion-dollar market capitalization in 2018, you may have considered getting in on some of the action. Large-cap companies have market caps of over $10 billion and include giants like Alphabet, Microsoft, and Intel. There are more options than you think.

Large-cap stocks are much less risky than small-cap and mid-cap stocks, but the stocks can still find modest regular gains.